The marks DO point up as indicated. I am not sure what is going on based on your explanation. Perhaps you could tell me how this all came about because they DO NOT normally "jump time" between the intake and exhaust.
Do you have the special tool to collapse the adjuster? This is a required tool. You can get them on E-bay for less than $15. Also if you buy a new adjuster, it comes with one installed. I ask because you say "up or down at TDC?". It's not a matter of "up or down", it's more like in the middle. If you have been taking it in or out without the tool, it could very well be damaged. Also, if it looks worn, I suggest you replace it.
Was/is the adjuster guides damaged?
Is it possible that someone has replaced some parts (incorrect) before you getting the vehicle?
Perhaps if you told me how this all came about, it could further shed some light on the cause if this condition. I have set up MANY of these cams this way and NOT had any problems.
BTW, in your first post you indicated an AWM motor, should not that be an AMB motor? AMB was phased in 2002, you said this was a "2004 audi a4 1.8 turbo awm". Can you shed any light on this?
Jake "THE AUDI DOCTOR"